Investing in Bonds For Dummies E-Book

Russell Wild

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch
• Veröffentlichungsjahr: 2015

Seitenzahl: 394

Beschreibung

Change up your investment strategy. Diversify with bonds! Stock, bonds, mutual funds--are all of these elements really necessary in your investment portfolio? Yes! Investing in Bonds For Dummies introduces you to the world of bond investment--and equips you to diversify your portfolio--through the concise and approachable presentation of the details surrounding this form of investment. This engaging text offers a clear, yet thorough take on the background of bond investment, helping you understand why it's such an important part of a well-rounded portfolio. Additionally, the book explores bond returns, risks, and the major factors that can influence the performance of bonds. When it comes to diversifying your investment portfolio, most financial advisors recommend a strategy that mixes high- and low-risk options, allowing you to protect your investment without being too conservative. Depending upon your age, financial goals, and other key factors, the percentage of your portfolio made up of bonds may vary; however, it's safe to say that bonds will play a role in your investment strategy. * Understand how to buy and sell bonds and bond funds, and why it's important to do so * Measure the returns and risks that different bonds have to offer, preparing yourself to make educated investment decisions * Diversify your investment portfolio by adding bonds to the mix * Avoid common investment mistakes when navigating the world of bonds Investing in Bonds For Dummies can keep your investment portfolio from getting stagnant by showcasing why diversification with bonds is essential to a successful investment strategy!

Leseprobe

Investing in Bonds For Dummies®

Published by:John Wiley & Sons, Inc.,111 River Street,Hoboken, NJ 07030-5774,www.wiley.com

Copyright © 2016 by John Wiley & Sons, Inc., Hoboken, New Jersey

Published simultaneously in Canada

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the Publisher. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

Trademarks: Wiley, For Dummies, the Dummies Man logo, Dummies.com, Making Everything Easier, and related trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc., and may not be used without written permission. All other trademarks are the property of their respective owners. John Wiley & Sons, Inc., is not associated with any product or vendor mentioned in this book.

LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: WHILE THE PUBLISHER AND AUTHOR HAVE USED THEIR BEST EFFORTS IN PREPARING THIS BOOK, THEY MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE CONTENTS OF THIS BOOK AND SPECIFICALLY DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NO WARRANTY MAY BE CREATED OR EXTENDED BY SALES REPRESENTATIVES OR WRITTEN SALES MATERIALS. THE ADVICE AND STRATEGIES CONTAINED HEREIN MAY NOT BE SUITABLE FOR YOUR SITUATION. YOU SHOULD CONSULT WITH A PROFESSIONAL WHERE APPROPRIATE. NEITHER THE PUBLISHER NOR THE AUTHOR SHALL BE LIABLE FOR DAMAGES ARISING HEREFROM.

For general information on our other products and services, please contact our Customer Care Department within the U.S. at 877-762-2974, outside the U.S. at 317-572-3993, or fax [phone]. For technical support, please visit www.wiley.com/techsupport.

Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.

Library of Congress Control Number: 2015950105

ISBN 978-1-119-12183-1 (pbk); ISBN 978-1-119-12184-8 (ePub); ISBN 978-1-119-12185-5 (ePDF)

Investing in Bonds For Dummies®

Visit www.dummies.com/cheatsheet/investinginbonds to view this book's cheat sheet.

Table of Contents

Cover

Introduction

About This Book

Foolish Assumptions

Icons Used in This Book

Beyond the Book

Where to Go from Here

Part I: Bond Apetit!

Chapter 1: The Bond Fundamentals

Understanding What Makes a Bond a Bond

Why Hold Bonds? (Hint: You’ll Likely Make Money!)

Introducing the Major Players in the Bond Market

Buying Solo or Buying in Bulk

The Triumphs and Failures of Fixed-Income Investing

Realizing How Crucial Bonds Are Today

Viewing Recent Developments, Largely for the Better

Chapter 2: All about the Interest

The Tricky Business That Is Calculating Rates of Return

Measuring the Desirability of a Bond

Understanding Yield

Recognizing Total Return (This Is What Matters Most!)

Measuring the Volatility of Your Bond Holdings

Returning to the Bonds of Babylonia

Chapter 3: Types of Bonds

Exploring the Many Ways of Investing with Uncle Sam

Industrial Returns: Corporate Bonds

Lots of Protection, a Touch of Confusion: Agency Bonds

Banking Your Money on Other People’s Mortgages

(Almost) Tax-Free Havens: Municipal Bonds

Global Bonds and Other Seemingly Exotic Offerings

Bond Investing with a Conscience

Part II: Bonds Away! The Bond Marketplace

Chapter 4: Investing (Carefully!) in Individual Bonds

Navigating Today’s Individual Bond Market

Dealing with Brokers and Other Financial Professionals

Doing It Yourself Online

Perfecting the Art of Laddering

Chapter 5: Picking a Bond Fund That Will Serve You for Life

Defining the Basic Kinds of Funds

What Matters Most in Choosing a Bond Fund of Any Sort

My Picks for Some of the Best Bond Funds

Chapter 6: Fulfilling the Need for Steady, Ready, Heady Cash

Reaping the Rewards of Your Investments

Finding Interesting Sources of Interest

Recognizing that Stocks Can Be Cash Cows, Too (Moo)

A Vastly Better Way to Create Cash Flow: Portfolio Rebalancing

Chapter 7: Finding Comfort and Security in Old Age

The Risk of Being Too Conservative

Calculating How Much You Can Safely Tap

Making the Most Use of Uncle Sam’s Gifts

Part III: Customizing and Optimizing Your Bond Portfolio

Chapter 8: Developing Your Investment Game Plan

Focusing on Your Objectives

Making Your Savings and Investment Selections

Understanding Five Major Investment Principles

Chapter 9: Risk, Return, and Realistic Expectations

Searching, Searching, Searching for the Elusive Free Lunch

Appreciating Bonds’ Risk Characteristics

Reckoning on the Return You’ll Most Likely See

Finding Your Sweet Spot

Chapter 10: Balancing Your Portfolio and Choosing Bonds

Why the Bond Percentage Question Is Not As Simple As Pie

Peering into the Future

Noticing the Many Shades of Gray in Your Portfolio

Making Sure Your Portfolio Remains in Balance

Sizing Up Your Need for Fixed-Income Diversification

Weighing Diversification versus Complication

Finding the Perfect Bond Portfolio Fit

Chapter 11: Strategizing Your Bond Buys and Sells

Discovering the Brave New World of Bonds

Deciding Whether to Go with Bond Funds or Individual Bonds

Is Now the Time to Buy Bonds?

Taxable and Tax-Advantaged Retirement Accounts

Part IV: The Part of Tens

Chapter 12: The Ten Most Common Misconceptions about Bonds

A Bond “Selling for 100” Costs $100

Buying a Bond at a Discount Is Better Than Paying a Premium, Duh

A Bond Paying X% Today Will Pocket You X% Over the Life of the Bond

Rising Interest Rates Are Good (or Bad) for Bondholders

Certain Bonds (Such As Treasuries) Are Completely Safe

Bonds Are a Retiree’s Best Friend

Individual Bonds Are Usually a Better Deal than Bond Funds

Municipal Bonds Are Free of Taxation

A Discount Broker Sells Bonds Cheaper

The Biggest Risk in Bonds is the Risk of the Issuer Defaulting

Chapter 13: Ten Mistakes That Most Bond Investors Make

Allowing the Broker to Churn You

Not Taking Advantage of TRACE

Choosing a Bond Fund Based on Short-Term Performance

Not Looking Closely Enough at a Bond Fund’s Expenses

Going Through a Middleman to Buy Treasuries

Counting Too Much on High-Yield Bonds

Paying Too Much Attention to the Yield Curve

Buying Bonds That Are Too Complicated

Ignoring Inflation and Taxation

Relying Too Heavily on Bonds in Retirement

Chapter 14: Ten Q & A’s with Bond Guru Dan Fuss

Dedication

Cheat Sheet

Advertisement Page

Connect with Dummies

End User License Agreement

Guide

Cover

Table of Contents

Begin Reading

Pages

i

ii

v

vi

vii

viii

ix

x

xi

xii

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99

100

101

102

103

104

105

106

107

108

109

110

111

112

113

114

115

116

117

118

119

120

121

123

124

125

126

127

128

129

130

131

132

133

134

135

136

137

138

139

140

141

143

144

145

146

147

148

149

150

151

152

153

154

155

156

157

158

159

160

161

162

163

164

165

166

167

168

169

170

171

172

173

174

175

176

177

178

179

180

181

182

183

185

186

187

188

189

190

191

192

193

194

195

196

197

198

199

200

201

202

203

204

205

206

207

208

209

210

211

212

213

214

215

217

218

219

220

221

222

223

224

225

226

227

228

229

230

231

232

233

234

235

236

237

238

239

240

241

242

243

244

245

246

247

248

249

250

251

252

267

268

269

270

271

272

273

274

275

276

Introduction

Welcome to Investing in Bonds For Dummies! Perhaps you bought this book online, either in text or digital format. But if you are still the kind of reader who prefers to browse through aisles and handle books before you buy them, you may be standing in the Personal Finance section of your favorite bookstore right now. If so, take a look to your left. Do you see that pudgy, balding guy in the baggy jeans perusing the book on getting rich by day-trading stock options? Now look to your right. Do you see that trendy young woman with the purple lipstick and hoop earrings thumbing through that paperback on how to make millions in foreclosed property deals? I want you to walk over to them. Good. I want you to take this book firmly in your hand. Excellent. Now smack each of them over the head with it. Nice job!

Wiley (the publisher of this book) has lawyers who will want me to assure you that I’m only kidding about smacking anyone. So in deference to the attorneys, and because I want to get my royalty checks … I’m kidding! I’m only kidding! Don’t hit anyone!